UK Takes The Spotlight With Uncertain Elections Looming

Although Greece's debt drama has been paramount for investors over the past few months, this week may see more of a focus on what has historically been one of the most stable economies in Europe— the UK. On Thursday, the region will hold its national elections which have set up a fierce battle between its Labour and Conservative parties. A Close RaceOpinion polls in the past weeks have shown that both parties are neck and neck, something many believe will end with neither gaining an overall majority when the vote is over. Investors are beginning to worry that the May 7 election could end with a hung parliament and a possible multi-party coalition. UK Position In Eurozone At StakeThe Conservative party has promised to hold a referendum on the UK's membership in the European Union if elected into power. Although most surveys suggest that the British population is in support of remaining a part of the EU, a referendum vote could have a negative impact on the region's market.Scottish National Party Gains GroundPolls have shown that the Scottish National Party is on track to win a sweeping majority of Scotland's seats in parliament, making the group a powerful ally for the Labour party. Representatives from the SNP have voiced their willingness to form a coalition government with the Labour party, but say they would refuse to partner with the Conservatives. This is another concern for markets as it could reignite bitter feelings from last year's Scottish independence vote.No Right AnswerNo matter this week's outcome, most expect to see UK markets take a beating in the days following the election. Because of the fragmented nature of this year's vote, a decisive outcome is considered very unlikely. For that reason, investors will be on edge about the region's future, which could drive the pound and the FTSE lower.